In year 1, a company agrees to build a fire station that will be completed in year 2. Construction starts in year 1. The station will have costs of $2,000,000 in year 1 and $2,000,000 in year 2. The company receives payment for the station of $5,000,000 in advance, in year 1. If the company uses the completed contract method, what net profit is recognized by the company in each year?

Year 1 Year 2

Select one:

a. $0 $1,000,000

b. $1,000,000 $0

c. $500,000 $500,000

d. I want to leave this answer blank